Spring is nearly upon us and change is in the air. I refer not just to a desperately wished-for change in the weather, but to a quite possibly dramatic change across the European asset finance industry.
This month, Leasing Life spoke exclusively to ING’s head of leasing Patrick Beselaere for the first time since the Dutch bank put five of its leasing businesses, including ING Lease UK, into run-off.
Since the restructure was announced in November, the European leasing industry has been awash with rumour regarding what impact this would have on bank leasing across the continent.
Almost every leasing professional I’ve talked to since then has spoken with resignation about the likelihood of other bank-owned lessors exiting major leasing markets soon.
As Beselaere explains the reasons behind the ING decision, he too is certain other banks are shortly to make similar choices, and says the European leasing industry is on the verge of big change.
It is easy to see this as negative for the industry; in Europe, the bank-owned lessors have long been dominant and those who rely on them for funding may be apprehensive about what consolidation might mean for their businesses, not to mention those whose jobs may be on the line should lessors wind down.
But to think this way underestimates the pragmatism and tenacity of the leasing industry.
Since the ING Lease exit from the UK, several firms have stepped in to plug the funding gap and have hired many of the experienced leasing professionals whose future was uncertain.
The country’s broker-introduced market, in which ING Lease was a significant player, is now much more diverse than it was, with the leasing arms of emerging banks, manufacturer finance divisions, independents
and start-ups taking slices of the market.
True innovation, that much talked- about but frustratingly nebulous concept, may not be the strong suit of this sector – but adaptability certainly is. Should major bank-run leasing networks feel it necessary to retrench in the coming months, others will develop and modify their leasing businesses to take advantage, and ensure that the vital funding which lessors provide to Europe’s businesses will continue to flow.
And as Mike Francis of Investec Asset Finance remarked this month when I asked him whether he felt we were bound to see another market exit; surely the biggest certainty is that we’ll see a new entrant.
A great example of the inventive and opportunistic nature of the leasing industry can be seen by the approach taken by BNP Paribas Leasing Solutions and Close Brothers Asset Finance to the mature and highly developed printer finance market.
Both firms talk to Leasing Life this month about the strategies they have in place to ensure finance continues to play a vital role in the print sector, as demand for digital equipment develops and additional services become crucial.
Further afield, as regulation is opening up the huge field of Indian leasing to foreign firms, there is an opportunity for Europe’s lessors to take their experience from mature markets and apply it India’s nascent industry.
There is a positive lesson to be learned from the Indian leasing market which can be applied to a European industry facing a potential shake-up, too. In order to maximise market coverage and develop leasing into the funding option of choice for India’s businesses, lessors, bank and manufacturer-owned alike, are forging partnerships and sharing knowledge and experience as they adapt to the country’s unique business landscape.
Approaching challenges in a practical way and seeing opportunity despite obstacles is something the leasing industry does very well.
As such, if the European market is about to change, it is unlikely to be to its detriment and will instead show the industry at its creative and pioneering best.